The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. AFL's P/E of 13.60 (using the 3 year PE) passes this test.

PRICE/BOOK RATIO:PASS

The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. AFL's Price/Book ratio is 1.40, while the P/E is 13.60. AFL passes the Price/Book test.

1. Marketpotential: Can the company grow exponentially?
FAIL: due to demographic trends in Japan and high current penetration

2. Marge: Margin and/or Return on Equity
15-20% ROE pass

3. Moat: Pass Economies of Scale and Brand

4. Management: Pass

5. Money: Is the price ok? Pass

Checklist failure: market potential for growth

Personal note: Many Americans don't save and invest. Customers would probably be better off saving and investing their money in a cheap index fund than paying premiums to AFLAC and its shareholders. That way they would have more money for a rainy day.